How Amazon's Competitors Are Gaining an Edge Over the Giant

I don’t think anybody needs to be introduced to Amazon these days.

The Washington-based company, established in 1994, is today known as the second-largest retailer, behind only Walmart, among the top Amazon competitors.

Amazon continues to be the preferred home for third-party sellers, who, in 2023, sold 4.5+ billion goods on the platform. And while Amazon is incredibly dominant and reigns supreme in the minds of many, it has plenty of competitors.

Understanding who they are and what they do puts you in a unique position as a small business owner.

You can discover alternatives that may become preferred web services over Amazon, or you can become that alternative.

That’s what this guide is all about. In this blog post, we’ll discuss Amazon’s competitors, the various industries Amazon covers, and the innovations brought forth by its competitors.

Let’s get started!

Table of Contents

eCommerce Giants Rivaling Amazon

Leveling the playing field against Amazon means being a pretty big brand yourself, which the following businesses I will examine in this section could be classified as.

They’re either bigger than Amazon (in the case of Walmart) or so big they could eclipse Jeff Bezos’s company someday. Maybe.

Let’s look at the top three Amazon competitors, including what they do and how and why they could potentially surpass Amazon or at least be on the same footing.

Walmart

Although initially created as a brick-and-mortar store when it began in 1962, Walmart has proven it can keep up with the times and has since moved to eCommerce courtesy of partner company Global eCommerce.

That’s why it’s a top Amazon competitor.

This Walmart division manages international brands from Asda to Sam’s Club and Walmart, making it possible to ship its 120,000+ stock items to customers nationwide.

Just in case the 4,617 Walmarts in the United States alone aren’t cutting it.

Walmart has been online longer than most people give it credit for, debuting its website in 2000. Today, Walmart continues to maintain that website. It also has an app and a presence on third-party delivery services like Instacart.

These moves are all part of Walmart’s strategic expansion into digital realms.

The Big W already had a stronghold on physical retail, with a documentary called The High Cost of Low Price (from 2005) exposing how insidious the brand had become by opening stores here, there, and everywhere, many of which are 24/7.

The retailer could better compete with Amazon by moving into digital sales, a frontier Walmart had not yet conquered. This approach has worked, as you’ll recall, that Walmart is the top retailer in 2024, not Amazon.

eBay

Founded in 1995, eBay has always been involved in eCommerce since the day it was founded by Pierre Omidyar. It and Amazon have that much in common. However, eBay differs from Amazon in several vital ways.

For starters, while Amazon sells primarily third-party products and some of its goods, all the products on eBay are third-party. Also, while you can immediately buy anything you like on Amazon, you can’t always do the same on eBay.

eBay uses a bidding system for many products, allowing users to input prices as the bid clock nears zero. The bidder with the highest amount gets the item as the timer runs out. The losers don’t have to pay anything, but the winning bidder is on the hook for whatever amount they bet on last.

Despite its auction-style sales, eBay has raked in some pretty serious cash. In the first quarter of 2024, it achieved $2.56 billion in sales, no small feat.

For comparison, that’s as much as eBay earned in the fourth quarter of 2023.

That said, it’s had higher sales periods, such as in the first quarter of 2021. That year, it brought in $3.02 billion in sales. It’s only about $50 billion behind, but that’s no small amount at all, and it will make it difficult for eBay to beat out Amazon or Walmart.

However, eBay has made some right moves, such as gravitating away from its auction model, bringing it fame and success. Instead, eBay has begun introducing fixed prices, much like its eCommerce competitors use.

While maybe it’s less fun for customers, the merchants or sellers don’t mind it. After all, they choose eBay over other eCommerce stores and marketplaces to bring in sales.

If they can’t do that because the auction system takes too long to play out or auction bids aren’t bringing in as much money as if a customer could buy the item directly, a merchant might feel inclined to leave eBay.

If eBay wants to win back those lost sales circa 2021, its decision-making makes sense.

Shopify

Another major Amazon competitor is Shopify, an eCommerce business created in Canada in 2006. Its operational model is different from that of Amazon. Shopify hosts online stores, of which there are more than 4.6 million in 175 countries.

Its revenue for the 12 months until March 2024 equaled $7.413 billion, which is not enough to overtake Amazon or Walmart but is still excellent in its own right. More importantly, Shopify’s sales are on an upward trajectory and have been for a while, with year-over-year boosts of roughly 25.56%.

You may have noticed that Amazon has begun moving toward focusing more on brands rather than anonymous third parties on its platform, which is surely a response to Shopify’s rise to success in the eCommerce sphere.

Shopify empowers small businesses and, in providing eCommerce infrastructure, has wound up in an indirect yet still hot competition with Amazon.

Technology and Innovation from Amazon’s Competitors

The forward march of technology doesn’t stop.

While Amazon continues to innovate, it’s not the only one. Brands such as Netflix, Google, and Disney are all formidable opponents in the technology sphere, another area where Amazon has others breathing down its figurative neck.

Let’s dive deeper into what these technologies rival what Amazon has on the market and what this could mean for the big retailer.

Google and Apple and their respective advancements in smart home tech

Whether you love it or hate it, you can’t deny it. I’m talking about smart tech, of course. The smart home market has grown in giant leaps and bounds in only a short period, with sales for 2024 estimated to achieve $38.8 billion.

That’s not all. By 2028, if smart home products continue growing at their rate of nine percent a year, the sales that year will hit $55 billion.

Smart home products and appliances comprise a smart home, a series of devices connected to one property that allows the user to control them via their voice or phones. And why are these products such big sellers? They’re excellent for convenience.

If you forget to turn off your lights and have already left the house, you don’t have to turn around and drive back home. You can let your smart devices do it for you.

Unsurprisingly, huge tech and retail companies, from Google to Amazon and Apple, have entered the smart tech trend. Amazon has Alexa, Apple’s got Siri, and Google has…well, it doesn’t have a name. You can say, “Hey, Google” to activate it.

People generally only need one smart device, so which brand of the three do consumers reach for when they want the unmitigated convenience of smart tech?

That would be Apple, yet another viable Amazon competitor.

Apple already has a huge, loyal fanbase. Among those are its quality products, its prioritization of product design, and the ecosystem of its products, which are interconnected. Consumers have chosen Apple, not Amazon, for their smart tech needs.

Sorry, Alexa! Apple is just known for its tech a lot more.

Streaming wars begin

Amazon’s Prime Video has begun offering streaming services to become an all-encompassing eCommerce brand. You can watch NFL Thursday night games, a super-competitive bid that Amazon’s spent billions on per year, and in 2024, customers could watch Super Bowl LVIII on Amazon Prime Video for the first time.

Amazon Prime Video is an attractive streaming service because it’s free. Despite the name, you don’t need an active Prime membership to watch the programs on the service.

This gives Amazon an advantage over streaming giants such as Disney+ and Netflix, paid services with increasingly rising prices.

Netflix faced a steep backlash for the higher service costs, although this Amazon competitor continues to survive just fine.

However, Amazon has a different focus than Disney+, which primarily airs classic cartoons, Disney movies, and Star Wars programs. Its focus is also different from that of Netflix, which has a selection of original and third-party movies and television shows. However, the focus is more similar to the latter than the former.

Amazon’s branching out into the NFL more to win viewership is just one of its unique content strategies for Amazon Prime Video. It’s also focused more on improving customer engagement, which seems to be paying off well.

Is Amazon the most popular streaming platform? That would still be Netflix, but you never know the future.

The Dynamics of International Market

Although created in the US, Amazon has expanded to international waters using AmazonGlobal for out-of-country shipping and its Amazon Global Store for greater eCommerce opportunities.

While moving abroad is always an exciting experience, it also comes with a new set of Amazon competitors like Rakuten and JD.com, which are only the competitors we already know.

There are plenty of emerging markets Amazon is entering that also have competition.

Let’s review what the future could hold for Amazon as it treads more deeply into international waters.

Existing competition

Graphics of Rakuten and Amazon Japan logos versus one another on a brick background — *Image courtesy of YouTube*

Although eCommerce brands like JD.com and Rakuten especially are household names here, they’re both based in Asia. JD.com originated in Beijing in 1998 and is one of China’s most valued B2C online marketplaces. Rakuten hails from Japan and was created in 1997.

These companies are based on international soil, yet, in the case of Rakuten, they have had no trouble moving over to America and building an eCommerce monopoly as an Amazon competitor.

So, where does that leave Amazon? Well, you have to consider that it already has its foot in the door, so to speak. Its greatest number of sellers is not from the US but China, up to 59.3% of them. The rest of the breakdown is 34.8% of US-based sellers, 4% of Hong Kong sellers, and a variety of countries where the seller breakdown is 0.6% or lower.

That said, those are just the sellers on Amazon and don’t necessarily reflect Amazon’s move to Chinese soil. We have more solid stats about its online sales in Japan between 2013 and 2022, courtesy of Statista.

Sales have been steadily rising year over year, with the latest data in 2022 reporting that Amazon had raked in 3,205.1 billion Japanese yen. It sounds promising, but Amazon is not the biggest retailer in Japan yet, even though it is in the picture.

Emerging markets

We can’t ignore the emerging markets, with names like Mercado Libre and Flipkart taking over eCommerce and becoming Amazon competitors.

Flipkart is an Indian eCommerce brand called “the biggest online store” for sporting goods, jewelry, grocery, furniture, home goods, books, appliances, electronics, and fashion.

Mercado Libre is based in Latin America and serves almost 20 countries, making it the biggest payments and eCommerce ecosystem in that part of the world.

Amazon has so far wiped out any competition it’s had, and even though these two eCommerce platforms are entrenched in their respective markets, it wouldn’t be difficult for Amazon to do the same to them.

Challenges and Opportunities

Amazon may be in a promising position as one of the biggest names in eCommerce and raking in more-than-healthy sales, but it’s not without its challenges.

Each allows smaller players to carve niches into areas Amazon might not fully dominate.

Here are some competitive challenges the giant retailer could face.

Fraud prevention

Where do fraudsters go when they want to target unsuspecting victims? They play in the big pond, and Amazon is a vast pond. In that regard, it almost has a big, red target on its figurative back.

Unscrupulous characters can pretend they’re Amazon’s order fulfillment team or order processing representatives, taking sensitive information like a customer’s phone number, home address, email address, credit card number, or other payment information.

From there, it’s very easy to steal their identity and wreak other serious havoc, eroding trust in Amazon.

Small eCommerce businesses with more robust security and data protection could become viable alternatives.

Too many sellers

This might seem positive, but not exactly. With so many sellers rushing to Amazon, to say its market is oversaturated would be a ginormous understatement. This makes it harder for new sellers to penetrate the market, meaning they could leave Amazon if they don’t experience any success.

It’s not only Amazon that has this issue. eBay and Shopify also have vast numbers of respective sellers, making it more challenging for new eCommerce businesses to succeed.

This area is where a small business on an equally small platform has a considerable advantage.

Review management

Does Amazon post every last review that users submit? No, of course not. However, many of them go through it, usually within three days after submitting the review. Part of what can cause the delay, sometimes up to two weeks, is that Amazon has to check if the reviews are fake.

You see, out of 33.5 million products on Amazon that were bestsellers, it’s believed that more than 40% of them had fake reviews.

I’m sure I don’t have to tell you of the dangers of fake reviews, but I will anyway. They erode trust, cause customers to feel deceived and betrayed, and might make consumers jump ship.

With the numbers growing constantly, Amazon has so many more products and sellers that it will grow increasingly hard to manage its reviews. More fake reviews could further erode trust, whether as someone’s idea of fun or an affiliate marketing scam.

Small businesses are in a good position, as they have fewer reviews to contend with and can employ a robust review management system earlier than Amazon.

IP fraud

Intellectual property or IP is a term you often hear bandied about, but what does it mean? It refers to someone’s intellectual creation. For example, Scooby-Doo is someone’s IP; the same goes with SpongeBob SquarePants, Pikachu, and just about any significant character you can think of.

So, what happens when a third-party seller puts Pikachu on a T-shirt if it’s not made or associated with the Pokémon Company or Nintendo? Well, this is IP fraud in action. It’s illegal, but it still happens constantly, especially in a crowded market like Amazon.

Consumers can actively engage in IP fraud, often without even realizing it, because they don’t check the seller closely when buying a product. This is, again, yet another way to erode the trust between Amazon and consumers.

A smaller eCommerce brand can ban IPs they don’t have the rights to, instituting an approval system for items allowed on its platform to keep consumers’ trust.

More competition

Amazon competitors are always growing fiercer, so what does it do? It continues to innovate in different ways, whether that’s international advancement or getting into streaming services.

While in some regards, these actions continue to build Amazon’s monopoly, what if they can also cause the monopoly to come toppling down? One miscue could be all it takes.

Conclusion

Amazon’s landscape is growing increasingly competitive and cutthroat, a fact that hasn’t been lost on Jeff Bezos’s company.

That’s why Amazon is always looking to expand its market reach by getting involved in new and creative areas, whether streaming, smart home appliances and tech, or international markets.

Small businesses entering the eCommerce market might think they don’t stand a chance against Amazon and other retail giants like eBay, Walmart, and Shopify. However, that’s simply untrue.

Understanding the competitive dynamics at play for Amazon is step one of the process. Exploiting them is step two.

As a smaller business in a niche segment, you have many opportunities that Amazon doesn’t. Harnessing those is key to differentiating yourself and finding your share of the eCommerce market as an Amazon competitor.

EngageBay is an all-in-one marketing, sales, and customer support software for small businesses, startups, and solopreneurs. You get email marketing, marketing automation, landing page and email templates, segmentation and personalization, sales pipelines, live chat, and more.

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Frequently Asked Questions (FAQ)

1. What makes a company a direct competitor to Amazon?

They must be significant, multi-million or multi-billion-dollar corporations to strive against Amazon. An Amazon competitor must also have an eCommerce presence.

2. How can small businesses leverage the presence of Amazon’s competitors?

That’s simple – you can become a viable Amazon competitor by focusing on what Amazon can’t deliver (or deliver easily). For example, bolstering your authentic reviews, high-quality customer service, legit products, brand personality, and niche services will help you gain an advantage over the Amazon giant.

3. What strategies have proven effective for Amazon’s competitors in gaining market share?

Businesses willing to continually explore new markets, grow their product rosters, and discover fresh ways to innovate have become Amazon’s staunchest competitors and have begun edging out its market share.

4. Are there opportunities for niche markets amidst these giant competitors?

Oh, absolutely. A niche market as an Amazon competitor as the panacea to all that Amazon offers could be just what the eCommerce industry needs for a new direction. You can explore niche opportunities that Amazon could never have due to its broad and generalized service scope.

How Amazon’s Competitors Are Gaining an Edge Over the Giant